Milton Friedman

Milton Friedman (born July 31, 1912) is a U.S economist, known primarily for his work on macroeconomics and for his advocacy of laissez-faire capitalism. In 1976 he was awarded the Nobel Prize for Economics "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy." His book Free to Choose, coauthored with his wife Rose Friedman, was made into a ten-part television series that aired on PBS in early 1980.

Biography

Born in New York City, New York to a working-class family of Jewish Hungarian immigrants from Beregszász (Berehove, today Ukraine), Friedman grew up in Rahway, New Jersey, was educated at Rutgers University (B.A, 1932) and at the University of Chicago (M.A, 1933). After working for the federal government and for Columbia University, he received a Ph.D from that institution in 1946. He then served as Professor of Economics at the University of Chicago from 1946 to 1976, where he contributed significantly to the intellectual tradition of the so-called Chicago school of economics. Since 1977, Friedman has been affiliated with the Hoover Institution at Stanford University.

Friedman is widely regarded as the leading proponent of the monetarist school of economic thought. He maintains that there is a close and stable link between inflation and the money supply, rejects the use of fiscal policy as a tool of demand management and holds that the government's role in the management of the economy should be severely restricted. Friedman wrote extensively on the Great Depression, which he called the "Great Contraction," arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve. Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates.

Friedman has also supported various libertarian policies such as decriminalization of drugs and prostitution. In addition, he headed the Reagan committee that researched the possibility of a move towards a paid/volunteer armed force, and played a role in the abolition of the draft that took place in the 1970s in the U.S. He served as a member of U.S President Ronald Reagan's Economic Policy Advisory Board in 1981. In 1988 he received both the Presidential Medal of Freedom and the National Medal of Science. He has said that he is a libertarian philosophically but a member of the U.S. Republican Party for the sake of "expediency" ("I am a libertarian with a small l and a Republican with a capital R. And I am a Republican with a capital R on grounds of expediency, not on principle.")

Friedman made headlines by proposing a negative income tax to replace the existing welfare system and then opposing the bill to implement it because it merely supplemented the existing system rather than replacing it. In recent years Friedman has devoted much of his effort to promoting school vouchers that can be used to pay for tuition at both private and public schools, saying, "What is needed in America is a voucher of substantial size available to all students, and free of excessive regulations."

Friedman, worked at the Treasury Department during World War II and played an important role in designing the United States withholding tax system.[1] Before World War II, there was no withholding system; everyone paid his annual bill in one lump sum. And as Murray Rothbard put it[1]: "The Internal Revenue Service could never hope to extract the entire annual sum from the mass of the working population. Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector."

Friedman allowed the Cato Institute to use his name for its Milton Friedman Prize for Advancing Liberty in 2001. His wife Rose D. Friedman, sister of Aaron Director, with whom he founded the Milton and Rose D. Friedman Foundation for School Choice served in the international selection committee. Milton Friedman's son, David Friedman, has carried on his tradition of arguing in favor of free markets but to a further extreme, advocating anarcho-capitalism.

Political controversy

Friedman visited Chile in 1975 during the military dictatorship of Augusto Pinochet. Invited by a private foundation, he gave a series of lectures on economics. Several professors from the University of Chicago became advisors to the Chilean government and several Ph.D. graduates from the same university – known as "the Chicago boys" – served in Chilean ministries. Friedman met with Pinochet during his visit to Chile, but he did not serve as advisor to the Chilean government or maintain personal contact with Pinochet. Nevertheless, he was accused of supporting a regime whose policies included torture and the killing of political opponents. A number of protesters demonstrated against Friedman during the 1976 Nobel Prize ceremony. (See Miracle of Chile)

Critics have remarked that Chile's dictatorship used its power to implement free-market policies, thus contradicting the relationship that Friedman claims exists between free markets and political freedom. Friedman defends his role in Chile on the grounds that the move towards open market policies not only improved the economic situation in Chile but also contributed to the softening of Pinochet's rule and to its eventual replacement by a democratic government in 1990. He also stresses that the lectures he gave in Chile in 1975 were the same lectures he later gave without incident in China and other Socialist states.

In the 1970s, Friedman argued against the trade and diplomatic embargoes that many Western nations had imposed on the white minority governments of South Africa and Rhodesia (now Zimbabwe), claiming that the embargoes played into the hands of anti-Western, Communist insurgencies in those countries, that far more repressive regimes in Africa and elsewhere were not being similarly punished, and that progress towards racial equality and freedom in South Africa and Rhodesia might be better pursued through a policy of engagement with their governments. Friedman was criticized for visiting those countries in 1976 and meeting with members of pro-Apartheid government without publicly calling for repealing the racist electoral laws that were then in place.

In 2005, Friedman and more than 500 other economists, called for the legalization of marijuana in an open letter to the President, Congress, Governors, and State Legislatures of the United States.

Works

Books

• Capitalism and Freedom ISBN 0226264017
• Free to Choose: A Personal Statement ISBN 0156334607
• Monetary History of the United States, 1867-1960 (with Anna Schwartz) ISBN 0691003548
• Money Mischief: Episodes in Monetary History ISBN 0151620423
• Price Theory ISBN 3110109875
• Economic Freedom, Human Freedom, Political Freedom ISBN 188396900X
• Two Lucky People: Memoirs (with Rose Friedman) ISBN 0226264149
• Why Government Is the Problem ISBN 0817954422
• Milton Friedman in South Africa ISBN 0799202053

Notable academic publications

• The Methodology of Positive Economics (1953)

Quotes

• "I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible."
• "A major source of objection to a free economy is precisely that it [...] gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself."
• "Inflation is the one form of taxation that can be imposed without legislation."
• "The government solution to a problem is usually as bad as the problem."
• "There's no such thing as a free lunch."
• "We have a system that increasingly taxes work and subsidizes nonwork."
• "With respect to teachers' salaries[....] Poor teachers are grossly overpaid and good teachers grossly underpaid. Salary schedules tend to be uniform and determined far more by seniority." (Capitalism and Freedom)

See also

• Libertarianism
• Liberalism
• Contributions to liberal theory
• Chicago Boys
• Chicago school
• Mont Pelerin Society
• Neoliberalism
• Economy of Hong Kong
• Cato Institute

Lists

• List of economists
• List of economics consultancies and think tanks
• Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
• List of notable libertarian theorists and authors

External links

• The Friedman Foundation

Bios

• Home page of Milton Friedman
• About Milton Friedman
• PBS interview, profile and video
• Video of September 3, 2000 BookTV 'In Depth' interview
• 1976 Prize in Economics, from the official Nobel Prize website
• Milton Friedman on the Adam Smith Institute website

Articles

• March/April 1999 - The Business Community's Suicidal Impulse (talks about protectionism, bank regulation, privatized schooling, antitrust laws, bureaucracy, government burden)
• His view of the Chilean government
• Gary Becker on Friedman's influence in South America